What is a Grey Fleet and How do you Manage One?
Most businesses operate a grey fleet in some form or other; however, it is often seen as inefficient or low priority and tends to be left to manage itself.If a grey fleet is ignored or unmanaged, companies will fall short of their legal obligations and may encounter unexpected, spiralling costs.
What is a grey fleet?
A grey fleet is a vehicle owned and driven by employees for business purposes. This could include a single journey every few months, or even regular trips that cover thousands of miles annually.
Although the employee owns the vehicle, the employer should make checks as to whether the vehicle is adequately insured, taxed and MOT’d when used for business purposes.
Any vehicles which are used by employees under cash allowance schemes are also considered as part of a grey fleet.
What is a grey fleet driver?
A grey fleet driver is an employee who uses their own personal car for business purposes. Any journey made for business purposes which requires the use of a personal vehicle, means the employee will be classed as a grey fleet driver.
The employees are usually reimbursed on a pence per mile basis for using their private vehicle on business journeys.
Is a grey fleet different to occasional business use?
Yes, occasional business use is when an employee is required to use their own personal vehicle to drive themselves places for business matters. This is usually a one off scenario.
Employers still need to check that the employee has the correct insurance to drive in these circumstances. The grey fleet is not only considered to be vehicles that are used regularly for business use, such as by Sales Reps, for example.
Standard fleet vs grey fleet
Grey fleet management is a great way to allow your employees to use their own vehicles for business purposes, so long as the health and maintenance of the vehicles is in check.
It can reduce costs far below that of a standard fleet in which the business owns and operates the vehicles.
However, it is important you accurately monitor personal vehicle use and stay on top of mileage claims within your grey fleet.
Doing so will give you a better insight into the efficiency of your grey fleet. From here, you may be more equipped to judge whether or not your business would be better suited to having a company-led standard fleet.
Business Use Insurance is provided by the DVSA. To check if your drivers are insured, you should be asking them to show proof of this insurance, and you should be checking it covers the necessary levels for your business.
You must also ensure your drivers have up to date MOTs since you are legally responsible for them.
What are the risks of a grey fleet?
Despite the fact that reimbursing employees for fuel is cheaper than owning and ensuring a company’s own vehicle, it can become difficult to accurately track the extra mileage employees do on business related journeys. Employers can run the risk of overpaying for business travel.
Businesses could also be made liable for any third party claims as the result of an accident whilst an employee is using their vehicle on business use.
If an employee had an accident in a vehicle that wasn’t insured and caused an injury to a third party, or caused third party property damage, if the injured party couldn’t claim from the driver, they would sue the employer. This could prove to be very costly and could potentially put you out of business, if the claim proved to be big enough.
Moreover, duty of care can also be compromised by a business, if they allow employees to drive poorly maintained vehicles on business use.
Classes of Insurance
Class One
Class One insurance allows the insured to drive between different sites away from their normal place of work. However, it will exclude commercial uses, such as delivery of goods.
Class Two
This cover is required if you wish to insure another named driver for business purposes, but it excludes commercial use and selling.
This level is less common as not many people wish to cover their colleagues to drive their car for business use.
Class Three
This level of cover is required for business use the same as class one and two, but it also covers the transportation of light goods. It is necessary in circumstances, such as a collection driver using their own vehicle to deliver or collect goods, door-to-door sales or visiting clients with physical goods to sell.
There is also cover for social, domestic and pleasure either including or excluding commuting. However, this does not cover business use and employees may not always realise this.
How is a grey fleet managed?
Managing a grey fleet takes a lot of work, and managers need to be aware of what constitutes driving for the business.
You should have a grey fleet policy in place to follow, with key performance indicators in respect of your grey fleet management.
As a manager, you should be asking a number of questions when a team member makes trips for business, including a check on the employees licence, insurance policies and their vehicle. These checks should ideally be completed annually, with records being retained.
Payments of travel claims should only be made once drivers have complied with terms of licence checks, business insurance cover, MOT certificates and so on.
Grey Fleet checklist
There are a few things you should be checking as a grey fleet manager, including:
- Tracking employee vehicles fuel consumption and general wear and tear.
- Knowing when your vehicles are due for an MOT and service.
- Checking insurance and breakdown cover is in-date and valid.
- Keeping a log of the grey vehicles in your business.
- Consider telematics to accurately track your fleet’s journeys and increase efficiency.
Cost of grey fleet management
Managing a grey fleet can be problematic, time consuming and costly if it is not used effectively and efficiently.
At Fleetcover, we create efficient and uncomplicated fleet management solutions, and will do all the hard work for you. Contact us today to see how we can help your fleet.
